Breach of Contract vs. Breach of Trust: Key Legal Differences Explained
Documentation

Breach of Contract vs. Breach of Trust: Key Legal Differences Explained

In legal practice, terms like breach of contract and breach of trust are frequently used, yet they are often misunderstood by the general public. Although both terms refer to a failure in fulfilling certain obligations, they emerge from completely different legal relationships and carry distinct legal implications.

Also Read: Know All About The Service Agreement

What is a Breach of Contract?

A contract is a legally binding agreement between two or more parties. Under Section 2(h) of the Indian Contract Act, 1872, a contract is defined as “an agreement enforceable by law.” It generally includes essential elements such as:

  1. Offer and acceptance

  2. Lawful consideration

  3. Capacity of parties

  4. Free consent

  5. Lawful object

A breach of contract occurs when one party fails to fulfill the promises made in the contract without lawful excuse. The failure could be:

  1. Total non-performance

  2. Delay in performance

  3. Defective performance

Example: If A agrees to sell 100 chairs to B by August 1st, but fails to deliver, A has breached the contract.

In such cases, the aggrieved party is entitled to remedies such as compensation, specific performance, or rescission.

Also Read: How Well-Drafted Contracts Help Avoid Costly Legal Penalties and Disputes for Businesses

What is a Breach of Trust?

A trust is a fiduciary relationship in which one person (the trustee) holds property, funds, or confidential information for the benefit of another (the beneficiary). It is governed by honesty, loyalty, and good faith.

A breach of trust occurs when the trustee:

  1. Uses the entrusted asset for personal benefit

  2. Acts contrary to the trust deed

  3. Fails to act in the best interest of the beneficiary

Example: If an employee is given ₹5 lakh for business purchases and uses the money to pay off a personal loan, it constitutes a breach of trust.

This breach is not merely a civil issue — it may attract criminal liability under the Bharatiya Nyaya Sanhita (BNS), 2023.

Also Read: All You Need to Know About Online Contracts in 2025

Legal Framework for Breach of Trust in India

Civil Law:

  • Under Indian trust laws and equitable principles, the court may order:

    1. Restitution of misused property

    2. Compensation to the beneficiary

    3. Removal of the trustee

Criminal Law:

  1. Criminal breach of trust is covered under:

    1. Section 316 to 320 of the Bharatiya Nyaya Sanhita (BNS), 2023 (earlier IPC Sections 405 to 409)

  2. To constitute a criminal breach of trust, there must be:

    1. Entrustment of property

    2. Dishonest conversion or misuse by the accused

Punishment can include imprisonment (up to 3 or more years) and/or fine, depending on the severity and the nature of the relationship (e.g., employee, agent, public servant).

Also Read: Understanding Breach of Contract: Types, Consequences, and Legal Remedies

Key Differences Between Breach of Contract and Breach of Trust

Although both involve a failure to uphold obligations, their underlying nature, legal remedy, and seriousness vary significantly.

Nature of Relationship

  • Breach of Contract: Arises out of a mutual agreement between two or more parties.

  • Breach of Trust: Based on a fiduciary relationship where one party is morally and legally bound to act for the benefit of the other.

Type of Duty

  • Contract: Duties are defined strictly by the contract — deliver a product, provide a service, or make a payment.

  • Trust: The duty is moral and fiduciary — to act in good faith, protect the beneficiary’s interest, and avoid personal gains.

Requirement of Dishonesty

  • Breach of Contract: Dishonest intention is not necessary. Even an innocent failure or delay may amount to breach.

  • Breach of Trust: Dishonest or fraudulent intention is a key element, especially for criminal liability.

Legal Classification

  • Breach of Contract: Always a civil matter.

  • Breach of Trust: Can be both civil and criminal, depending on intent and severity.

Legal Provisions

  • Contract: Governed by the Indian Contract Act, 1872.

  • Trust: Civil provisions are governed by the Indian Trusts Act, 1882; criminal breach of trust is governed by BNS, 2023.

Proof and Burden of Proof

  • Contract: Plaintiff must prove:

    1. Existence of a valid contract

    2. Terms and breach

    3. Resulting damages

  • Trust: Prosecution must prove:

    1. Entrustment of property

    2. Dishonest misappropriation or misuse

Remedies

 

Breach of Contract Breach of Trust
Compensation/Damages Criminal prosecution
Specific performance Restitution of property
Rescission of contract Removal of trustee
Injunction Accounting of profits

 

Also Read: What Legal Options An Employer Have Against An Employee Who Violated The Notice Period In India

Intent

  • Contract: Intent is not mandatory; liability can arise from negligence or oversight.

  • Trust: Criminal liability demands dishonest or fraudulent intent.

Scope

  • Contract: Wide-ranging — personal, professional, or commercial dealings.

  • Trust: Narrow — only where one party is entrusted to act for another’s benefit.

Examples

Breach of Contract:

  1. A real estate developer fails to deliver a flat on time.

  2. A business fails to pay for goods delivered by a supplier.

Breach of Trust:

  1. A lawyer siphons off a client’s funds held in escrow.

  2. A treasurer of a charity uses funds for personal luxury.

Illustrative Comparison Table

 

Feature Breach of Contract Breach of Trust
Nature of Relationship Contractual Fiduciary
Governing Law Indian Contract Act, 1872 Trusts Act, 1882; BNS 2023
Proof Required Existence of contract and breach Entrustment and dishonest misuse
Dishonesty Required? Not necessary Essential for criminal charge
Legal Remedy Civil (damages, performance) Criminal & Civil (jail, fine, restitution)
Example Delivery failure, payment issues Misuse of entrusted funds
Intent Requirement Not mandatory Mandatory in criminal breach
Jurisdiction Civil Courts Civil & Criminal Courts

 

Also Read: Legal Remedies for Termination of Contracts

Conclusion

In conclusion, breach of contract and breach of trust are two distinct legal concepts rooted in different types of obligations. While breach of contract is a civil wrong based on non-fulfillment of contractual terms, breach of trust involves a deeper ethical and legal failure, often with criminal implications if done dishonestly.

Understanding the nature of these two legal wrongs helps both individuals and businesses protect themselves. Whether you're entering into a contract or entrusting someone with your property or information, it's essential to know the potential legal consequences of a violation.

Being aware of your legal rights and the correct remedies can make all the difference in resolving disputes quickly and justly.

Final Thoughts

When you face a situation where another party has failed in their obligations, identifying whether it is a breach of contract or a breach of trust is crucial. It determines not only the nature of the legal remedy but also the forum where you should file your case — civil or criminal court.

If you're unsure, always consult a legal expert or seek online legal advice from trusted platforms like LegalKart to assess your case and chart the most effective course of action.

Supreme Court to Decide: Will Law Degrees in India Become Shorter and More Affordable?
Civil

Supreme Court to Decide: Will Law Degrees in India Become Shorter and More Affordable?

Introduction: The Legal Education Debate Reaches the Supreme Court

Legal education in India is at a turning point. On September 9, 2025, the Supreme Court of India is set to hear a significant Public Interest Litigation (PIL) that questions the duration, affordability, and overall structure of legal degree programmes like the five-year integrated LL.B and two-year LL.M courses.

The PIL, filed by Advocate Ashwini Kumar Upadhyay, calls for transformative changes, including the creation of a Legal Education Commission. The petition has sparked a national debate: Should law degrees be shortened? Can legal education be made more accessible and affordable to aspiring lawyers across India?

Let’s explore this in detail — from the contents of the PIL to its legal implications, the role of regulators like the BCI and UGC, and the potential impact on students, law colleges, and the legal profession.

Also Read: How to Become a Lawyer in India: A Comprehensive Guide

What Triggered This PIL?

The PIL was filed in the Supreme Court by Ashwini Kumar Upadhyay, a practicing lawyer and public interest advocate known for filing socially relevant cases. In his petition titled “Ashwini Kumar Upadhyay v. Union of India & Ors”, he raised several pressing concerns:

  1. The five-year integrated LL.B programme is excessively long and financially burdensome.

  2. The two-year LL.M programme adds further delay and cost for students.

  3. The current system does not align with the National Education Policy (NEP) 2020, which recommends a four-year multidisciplinary undergraduate programme.

  4. Legal education lacks a dedicated regulatory commission, unlike medicine or engineering.

  5. Many private colleges and even National Law Universities (NLUs) charge exorbitant fees, making legal education inaccessible for students from economically weaker backgrounds.

Also Read: Supreme Court Mandates Three Years of Legal Practice for Judicial Service Eligibility: A Complete Guide

Supreme Court’s Response: Who Has Been Notified?

On July 2025, a bench comprising Justice Surya Kant and Justice Joymalya Bagchi issued notices to:

  1. Central Government

  2. Bar Council of India (BCI)

  3. University Grants Commission (UGC)

  4. Law Commission of India

All these bodies have been asked to file their responses before the next hearing on September 9, 2025. The matter now lies before the highest constitutional court in the country.

Also Read: Top Ten Criminal Lawyers In India

Key Demands in the PIL

Here’s a simplified breakdown of what the PIL demands:

Formation of a Legal Education Commission

  1. A regulatory body consisting of jurists, retired judges, senior advocates, and legal scholars.

  2. Purpose: To study and recommend reforms to the structure, duration, pedagogy, and accessibility of law degrees.

Shortening of the Law Degree Duration

  1. Revise the five-year LL.B and two-year LL.M courses to align with NEP 2020 standards.

  2. Possibility of a four-year integrated LL.B, or three-year undergraduate + one-year LL.B. model.

Affordability and Access

  1. Make legal education more affordable by regulating fee structures, especially in private institutions.

  2. Provide scholarships and education loans with lower interest rates for law students.

Early Entry into Legal Practice

  1. Encourage early entry into the profession by reducing academic delays.

  2. Cites examples of legends like:

    1. Ram Jethmalani, who began practice at 17

    2. Fali Nariman, who earned his law degree by age 21

Dedicated Regulatory Authority

  • Proposes a Law Education Commission similar to:

    1. National Medical Commission (NMC) for medical education

    2. All India Council for Technical Education (AICTE) for engineering and technology

Legal Education in India: Current System

Five-Year Integrated LL.B

  1. Introduced in 1987 through the National Law School of India University Act.

  2. Combines a Bachelor’s degree (B.A., B.Com, B.Sc) with LL.B.

  3. Popular among students post-12th grade.

Three-Year LL.B

  1. For students who already hold an undergraduate degree.

  2. Still offered by many public and private universities.

Two-Year LL.M

  1. Postgraduate legal education.

  2. Focuses on research and specialization (e.g., corporate law, criminal law, constitutional law).

Fee Structures

  1. NLUs charge between ₹2 lakh to ₹3.5 lakh per year.

  2. Private colleges may charge even more.

  3. Law education can easily cost over ₹10–15 lakhs, making it unaffordable for many.

Why Advocate Ashwini Upadhyay Thinks It’s a Problem

1. High Costs = Limited Access

  1. Students from low-income families often cannot afford law school.

  2. Many give up the dream due to tuition fees, hostel expenses, and exam costs.

2. Lengthy Education = Delayed Career Start

  • A five-year law degree followed by two years of LL.M can delay earning opportunities until age 25 or later.

3. Mismatch with NEP 2020

  1. NEP encourages flexibility, multidisciplinary learning, and early employability.

  2. Law education, the PIL argues, hasn’t kept up with these reforms.

4. Regulatory Gaps

  1. No single authority governs legal education.

  2. BCI focuses on professional licensing, while UGC governs university curriculum.

  3. Result: No unified policy, overlapping jurisdictions, and inconsistent quality standards.

What Does the National Education Policy 2020 Say?

The NEP 2020, launched by the Ministry of Education, recommends:

  1. Four-year undergraduate degrees

  2. Multidisciplinary curricula

  3. Multiple exit options

  4. Entry-level employment readiness

The PIL argues that law education has failed to adapt to these recommendations. By retaining rigid formats, it continues to be inaccessible and outdated.

Legal Giants Who Benefited from Early Start

The petition makes a compelling emotional and historical argument by pointing out how great Indian jurists started early in life:

 

Name Age at Starting Law Career Notable Achievement
Ram Jethmalani 17 One of India’s top criminal lawyers
Fali Nariman 21 Senior Advocate, Former Solicitor General
Soli Sorabjee 22 Former Attorney General
Nani Palkhivala 23 Constitutional expert and economist

 

These examples highlight that longer degrees are not necessarily better, and early engagement with the legal field can lead to outstanding contributions.

Arguments Against the Current Legal Education Structure

The PIL raises several systemic problems:

  • Commercialisation of legal education, especially by private colleges

  • Inadequate infrastructure and faculty in many law schools

  • Outdated curriculum, not aligned with modern legal needs like tech law, AI, IP, and cybercrime

  • Rigid examination systems, which don’t assess practical legal skills

  • Insufficient internship opportunities, particularly in tier-2 and tier-3 cities

What Could Change If the PIL Succeeds?

If the Supreme Court agrees with the PIL and asks for restructuring, several positive outcomes may follow:

1. Shorter, Flexible Law Degrees

  1. Introduce four-year LL.B aligned with NEP.

  2. Allow credit transfers, lateral entries, and exit points.

2. Affordable Education

  1. Cap tuition fees at public institutions.

  2. Scholarships and education loans for students from marginalised communities.

3. Skill-Oriented Learning

  1. Emphasis on clinical legal education, moot courts, legal aid work.

  2. Integration of legal tech, ethics, and policy making in the curriculum.

4. Unified Regulation

  • Set up a Law Education Commission to:

    1. Design curriculum standards

    2. Accredit law schools

    3. Conduct national legal education audits

5. Early Professional Start

  1. Reduce unnecessary academic delays.

  2. Let students join litigation or corporate law earlier.

Concerns from the Legal Education Community

While reform sounds promising, several experts have expressed caution:

1. Risk of Diluting Quality

  • Shorter degrees may compromise on legal depth and rigor.

2. Regulatory Overlap

  • Adding another regulator could increase bureaucracy, unless powers are clearly defined.

3. One Size Doesn’t Fit All

  • India’s legal education needs regional flexibility, not just top-down reforms.

4. Implementation Delays

  • Even if reforms are approved, rollout across 1500+ law colleges may take years.

What Do Law Students Think?

Many law students have welcomed the PIL, especially those from rural or middle-class backgrounds. Here’s what some of them had to say:

  1. “If fees are regulated and law degrees made shorter, I can start supporting my family sooner.”

  2. “We want practice-based learning, not just theory-heavy semesters.”

  3. “Why is legal education so expensive when the aim is to uphold justice and equality?”

These voices are a powerful reminder of why education reforms should be people-centric.

International Comparison: How Long Is Law School Elsewhere?

Country Duration of Law Degree Comments
United States 3 years (after any UG degree) J.D. is postgraduate
United Kingdom 3 years + 1-year LPC Modular and skill-based
Australia 5 years integrated / 3 years Similar to India
Germany 4-5 years Includes state exams and practicals
Singapore 4 years NEP-aligned model

 

The petition uses these comparisons to argue that India’s structure is needlessly long and expensive.

What Happens on September 9, 2025?

On this date, the Supreme Court will review responses from the Centre, BCI, UGC, and others. The judges will consider:

  1. Whether the current model violates the Right to Equality and Right to Education

  2. Whether there's a need for a Law Education Commission

  3. Whether legal education should align with NEP 2020

The judgment could become a turning point for legal education in India.

Conclusion: Legal Reform or Missed Opportunity?

This PIL presents a historic opportunity to democratise legal education. By reducing course duration, regulating fees, and improving quality, the legal profession could become more inclusive, future-ready, and socially impactful.

Whether the Supreme Court pushes for a Legal Education Commission or recommends changes through existing bodies, one thing is clear — legal education in India cannot remain frozen in time.

It must evolve with the needs of the society it serves.

How to Use the Traffic Prahari App to Report Violations and Earn Up to ₹50,000 a Month
Traffic Challan

How to Use the Traffic Prahari App to Report Violations and Earn Up to ₹50,000 a Month

Do you often spot people breaking traffic rules on Delhi’s roads? What if we told you that your smartphone could help make the roads safer—and earn you money at the same time?

Welcome to the Traffic Prahari App, a digital initiative by the Delhi Traffic Police that empowers citizens to report traffic violations and earn monthly rewards—up to ₹50,000! This app not only improves road safety but also recognizes the vital role of responsible citizens in enforcing traffic laws.

What Is the Traffic Prahari App?

Traffic Prahari, which translates to “Traffic Sentinel,” is a mobile application developed by the Delhi Traffic Police. It was relaunched on September 1, 2024, to improve citizen involvement in traffic law enforcement.

The app allows citizens to:

  1. Report real-time traffic violations (e.g., jumping red lights, riding without helmets, driving in wrong lanes)

  2. Upload photographic or video evidence

  3. Help authorities take swift action by issuing challans

  4. Earn financial rewards for verified reports

The initiative revives the earlier Traffic Sentinel Scheme launched in 2015 but takes it a step further by using advanced technology, GPS tracking, and a reward system to ensure better citizen engagement and transparency.

Also Read: Pay Traffic Challan Online Step-by-Step Guide Legalkart

How to Download the Traffic Prahari App

The app is available on both major mobile platforms:

  1. Android Users: Google Play Store

  2. iOS Users: Apple App Store

Search for “Traffic Prahari - Delhi Police” and install the app on your device.

How to Register and Create Your Account

After downloading, follow these steps:

  1. Open the App: Launch it from your phone.

  2. Sign Up with Mobile Number: Enter your mobile number.

  3. OTP Verification: A One-Time Password (OTP) will be sent to your number. Enter it to verify.

  4. Create a Profile: Add your name, email ID, and other optional details.

Note: You only need a working mobile number and internet connection to register.

Also Read: How To Check Delhi E-Challan Status & Make Payment Online

Types of Traffic Violations You Can Report

The app allows users to report a wide variety of violations, such as:

Violation Type Description
No Helmet Riders or pillion riders without helmets
Red Light Jumping Vehicles crossing the stop line during a red signal
Using Mobile While Driving Talking/texting while driving
Wrong Side Driving Vehicles driving against the flow of traffic
Triple Riding More than two persons on a two-wheeler
Blocking Zebra Crossing Vehicles halting on pedestrian zones
Overloaded Vehicles Carrying more than allowed capacity
Illegal Parking Unauthorized or dangerous parking

 

Important: The image or video must clearly show the violation along with the vehicle number to be considered valid.

Also Read: Easy Traffic Challan Payment Guide - Legalkart

Step-by-Step Guide to Reporting Violations

Follow these simple steps:

Step 1: Spot the Violation

Look for any of the listed traffic violations.

Step 2: Capture Photo or Video

Use your smartphone to record the incident. Make sure the following are visible:

  1. The vehicle number

  2. The nature of the violation

  3. The surroundings for context

Step 3: Submit via App

Open the Traffic Prahari App and:

  1. Tap “Report Violation”

  2. Upload the photo/video

  3. The GPS location and timestamp will be auto-tagged

  4. Submit the report

Once submitted, the report is sent to the Delhi Traffic Police for manual verification.

Also Read: Step-by-Step Guide: Applying for HSRP via SIAM's Online Portal

What Happens After Submission?

Once your report is submitted, the Traffic Enforcement Team does the following:

  1. Verifies the Violation for clarity, authenticity, and relevance

  2. If the report is valid, a challan is issued to the offender

  3. Your contribution is added to your profile score

  4. At the end of the month, the top contributors are rewarded based on the number of verified reports

Reminder: Submitting false or misleading reports can result in disqualification from the program.

Also Read: FTA HSRP: Complete Guide to Online Registration, Process, Fees, and Status

Monthly Reward Structure: Earn Up to ₹50,000!

To encourage participation, the Delhi Police offers monetary rewards every month:

 

Rank Monthly Reward
1st Place ₹50,000
2nd Place ₹25,000
3rd Place ₹15,000
4th Place ₹10,000

 

  1. The winners are selected based on the number of valid reports submitted.

  2. Only verified violations are counted.

  3. Reports that result in challans carry higher weight.

Tip: Consistent reporting, image clarity, and covering different violation types improve your chances of winning.

Also Read: How to Get an NOC and Transfer Your Vehicle Across Indian States: A Step-by-Step Guide (2025)

Why It’s Not Just About Money

The Traffic Prahari App is not merely a reward-based program—it’s a community movement.

Road Safety Advocacy

Every report you submit contributes to:

  1. Reducing road accidents

  2. Preventing injuries and deaths

  3. Enforcing traffic discipline

Community Collaboration

In several Delhi neighborhoods:

  1. Citizens have formed WhatsApp groups to divide zones

  2. Teams coordinate to cover larger areas efficiently

This has led to a grassroots-level network of law-abiding citizens working together.

Civic Responsibility

This initiative promotes active citizenship and helps create a culture of accountability.

As DCP (Traffic) SK Singh mentioned, the app adds a crucial community-driven layer to road safety enforcement.

Also Read: E-Traffic Challans and the New Motor Vehicles Act 2019

Legal Safeguards & Privacy Protection

You may wonder, “Is it safe to report others?” Yes, the app ensures:

  • Your identity is confidential and not shared with violators

  • Only verified reports are processed

  • False reporting can lead to suspension from the app or legal consequences

The app aligns with the Motor Vehicles Act, Delhi Traffic Police guidelines, and cyber law safeguards.

Common Mistakes to Avoid

To ensure your reports are valid and accepted:

 

Mistake Why to Avoid
Blurry Images Vehicle number not visible
No Violation Evidence Cannot verify the incident
Edited Media Will be rejected
Submitting Old Incidents Only real-time reports are accepted
Submitting the Same Violation Repeatedly May be flagged as spam

 

Future of Community-Driven Traffic Enforcement

The Traffic Prahari App is not just a Delhi initiative—it is a model for other cities to replicate. With increasing urban traffic and limited manpower, community-based surveillance could become the future of traffic enforcement across India.

Other cities like Bengaluru, Mumbai, and Hyderabad are already studying similar models for implementation.

Final Thoughts: Be a Prahari, Be a Change-Maker

The Traffic Prahari App is more than just a way to earn money. It’s your opportunity to make Delhi safer, more disciplined, and more liveable. With just a smartphone and a little vigilance, you can:

  • Hold traffic violators accountable

  • Reduce accidents

  • Be rewarded for your contribution

  • Inspire others to follow the rules

UPI Rules Changed from August 1: Who’s Affected and What You Need to Know
Banking / Finance

UPI Rules Changed from August 1: Who’s Affected and What You Need to Know

Introduction

Unified Payments Interface (UPI) has revolutionized the way India makes digital transactions. From buying vegetables to paying rent, UPI has become a staple in every Indian's financial routine. But starting August 1, 2025, new UPI rules implemented by the National Payments Corporation of India (NPCI) are coming into effect, and these changes could affect how you use apps like PhonePe, Google Pay, Paytm, BHIM, and others.

While the aim of these updates is to make UPI payments more secure, reliable, and efficient, you might notice a few new restrictions and features in your daily transactions.

What Are the New UPI Rules from August 1, 2025?

On August 1, 2025, the NPCI rolled out new UPI rules focused on improving user experience, reducing network load, and ensuring fair usage of banking infrastructure.

Here are the key changes:

1. Bank Balance Check Limited to 50 Times a Day

Until now, users could check their bank balance on UPI apps an unlimited number of times. That’s changed.

  • New Rule: You can now check your bank balance only 50 times per day per UPI app.

  • Reason: This limit aims to reduce the stress on the banking servers, especially during peak hours.

2. Bank Balance Will Show Automatically After Each Transaction

To compensate for the above restriction:

  • Your bank balance will now automatically appear after each successful transaction.

  • This reduces the need for separate balance inquiries and helps you track spending in real time.

3. Pending Transaction Status Check Limited

  • You can now check the status of a pending transaction only three times, and that too at 90-second intervals.

  • This prevents repeated status queries that put unnecessary load on servers and confuses users.

4. AutoPay & Scheduled Transactions Now Restricted to Specific Hours

If you’ve set auto-debit for OTT platforms, utility bills, subscriptions, EMIs, etc., here’s what you need to know:

  • New Timing Rule: Scheduled autopayments will now only be processed before 10:00 AM or after 9:30 PM.

  • The idea is to ease the load on bank systems during busy hours (10 AM – 9:30 PM).

5. No Change in UPI Transaction Limits for Existing Users

  • The maximum number of UPI transactions per day remains 20, with a daily monetary cap of ₹1 lakh.

  • However, some banks may have stricter rules based on risk assessment.

6. Transfer Limits for New UPI Users

  • New users will be limited to ₹5,000 per transaction and a total of ₹5,000 in the first 24 hours.

  • This temporary limit is a security measure to prevent fraud and misuse.

Who Will Be Affected?

These rules will impact everyone who uses UPI platforms, but some groups may feel it more:

Category Impact
Regular UPI users May have to monitor balance checks and limit retries
New UPI users Face transaction caps for the first 24 hours
Businesses & Merchants Auto-payments may get delayed if not scheduled properly
Frequent utility bill payers Need to ensure billing aligns with allowed auto-debit time windows
App Developers & Fintechs Must integrate changes to comply with NPCI guidelines

 

Why Did NPCI Make These Changes?

The NPCI’s objective behind the updated UPI rules includes:

  1. Server Load Reduction: Limiting balance checks and pending status retries helps ease pressure on bank servers.

  2. Enhanced Transaction Efficiency: Pre-defined auto-pay times reduce UPI downtime during peak hours.

  3. User Awareness: Showing balance after each transaction promotes responsible usage.

  4. Security for New Users: Limiting initial transactions helps prevent fraudulent activity.

In short, it's about improving the robustness, security, and performance of UPI as a system.

UPI Apps Covered Under the New Rules

All UPI apps in India have to comply with these changes. This includes:

  • Google Pay (GPay)

  • PhonePe

  • Paytm

  • BHIM

  • Amazon Pay

  • WhatsApp UPI

  • Any banking app with UPI integration

So no matter which app you use, these rules will be enforced at the backend via NPCI’s protocols.

Will These Changes Affect the Security of UPI?

Yes — in a positive way.

  • Restricting retry attempts and capping balance checks minimizes chances of server overloads and phishing attacks.

  • Limiting new user transactions reduces the possibility of fraudulent large transfers.

Will UPI Still Be Free?

Yes. UPI continues to be zero-cost for peer-to-peer transactions and most merchant payments. These rule changes do not introduce any new charges.

However, keep in mind:

  • UPI Lite, a feature for offline payments under ₹500, may still have usage limitations depending on your bank.

UPI AutoPay: What’s Changed?

UPI AutoPay is commonly used to:

  • Pay OTT subscriptions (Netflix, Hotstar)

  • Settle utility bills (electricity, gas)

  • Auto-debit EMI or SIP investments

The new rule says:

  • These will now only be processed before 10 AM or after 9:30 PM.

  • You may experience a delay in billing during peak hours, so it’s best to schedule bills early or late.

Impact on Fintech and Businesses

For digital service providers and UPI-integrated merchants:

  1. Billing Systems Need Updates: Auto-debit cycles must comply with new time slots.

  2. Customer Communication: Merchants must alert users if auto-pay fails during peak hours.

  3. UPI Infrastructure Monitoring: Apps need robust systems to handle transaction retries within allowed limits.

What You Should Do as a UPI User

Here’s a quick checklist to make sure you're unaffected:

  1. Limit balance checks – Avoid hitting the 50-check limit.

  2. Schedule bill payments smartly – Choose non-peak hours.

  3. Avoid spamming pending status – Wait 90 seconds between retries.

  4. If new to UPI – Don’t panic at low limits; they’ll be lifted after 24 hours.

  5. Enable alerts – Make sure SMS/email alerts are active for all transactions.

Real-Life Example: How This May Affect You

Example 1:

You use Google Pay 4 times to pay different vendors and check your bank balance after each transaction. By the end of the day, you do this 30 times total. You’re still okay.

But if you habitually check your balance after every app opening, you may cross the 50-check limit. The app may block further checks until the next day.

Example 2:

You’ve scheduled an EMI auto-payment at 11 AM daily. From August 1, that EMI will now be queued or delayedunless it is rescheduled before 10 AM or after 9:30 PM.

Summary Table: New UPI Rules at a Glance

Feature Old Rule New Rule (From August 1, 2025)
Bank Balance Checks Unlimited Max 50 per day
Balance Display Manual Auto after every transaction
Status Check for Pending Txns Unlimited 3 times with 90-sec gap
AutoPay Timing Anytime Only before 10 AM or after 9:30 PM
Max UPI Txns per Day 20 No change
UPI Daily Limit ₹1 lakh No change
New User UPI Limit Depends on bank ₹5,000 for 24 hours

 

Top FAQs on UPI Rule Changes

1. Will I be charged for UPI balance checks?

No. But you are now limited to 50 checks per day per app.

2. What if I exceed the balance check limit?

You won’t be able to check balance on that app for the rest of the day. Transactions will still work if the bank is not under downtime.

3. Can I still make UPI payments after 9:30 PM?

Yes. Payments are allowed 24x7. The 9:30 PM timing only applies to auto-debits, not manual transactions.

4. What happens if my auto-payment fails?

You’ll likely get an alert. Reschedule it for early morning or late evening to avoid failure due to timing restrictions.

5. Will these changes apply on weekends or holidays?

Yes. The NPCI rules apply every day — including weekends and public holidays.

Final Thoughts

The August 1 UPI rule changes may seem like a hassle at first, but they’re designed to make India’s real-time digital payment system more reliable, secure, and user-friendly.

If you’re a frequent UPI user, just tweak your habits slightly:

  • Avoid unnecessary balance checks

  • Be patient with pending transactions

  • Schedule bill payments during NPCI’s non-peak hours

These updates are not meant to punish users, but to streamline the payment ecosystem for everyone — banks, apps, merchants, and customers alike.

By understanding and adapting to these new rules, you can continue enjoying the speed, ease, and safety of India’s most loved payment method — UPI.

Paying ₹55,000 Rent On Time? You May Still Face ₹1 Lakh TDS Penalty—Here’s Why
Landlord / Tenant

Paying ₹55,000 Rent On Time? You May Still Face ₹1 Lakh TDS Penalty—Here’s Why

Introduction: The Hidden Penalty Behind Timely Rent Payments

Paying your rent on time might make you feel like a responsible tenant—but what if that very act lands you with a ₹1 lakh penalty notice from the Income Tax Department? That’s exactly what happened to Abhishek, a salaried professional who was paying ₹55,000 as monthly rent without any defaults. His mistake? He didn’t deduct TDS or submit the required forms.

This blog unpacks the lesser-known TDS rules under Section 194-IB of the Income Tax Act, and explains why missing this obligation—even unintentionally—can be costly.

Who Must Deduct TDS on House Rent?

As per Section 194-IB of the Income Tax Act, 1961, any individual or Hindu Undivided Family (HUF), not subject to a tax audit, must deduct 2% TDS if the monthly rent exceeds ₹50,000.

Key points:

  • Applicable to salaried employees and non-auditable individuals.

  • TDS is to be deducted even if the landlord is a relative.

  • Applies only to rent paid to resident landlords. For non-residents, Section 195 applies (more on that later).

Real-Life Case: Why Abhishek Got Penalized

Let’s take a closer look at Abhishek’s case:

  • Monthly Rent: ₹55,000

  • Total Annual Rent: ₹6.6 lakh

  • TDS Not Deducted: ₹13,200 (2%)

  • Forms Not Filed: Form 26QC (challan) and Form 16C (certificate to landlord)

As a result, the Income Tax Department invoked Section 271H and levied a discretionary penalty of ₹1,00,000. He also incurred interest and late filing fees.

What Are the Tenant's Responsibilities Under Section 194-IB?

Here’s what a tenant paying over ₹50,000 rent/month must do:

  1. Deduct 2% TDS before paying rent (if rent is paid after Oct 1, 2024).

  2. Fill and submit Form 26QC (TDS challan-cum-statement) online.

  3. Download and issue Form 16C to the landlord.

No need for a TAN (Tax Deduction and Collection Account Number)—just a PAN suffices.

When Should TDS Be Deducted?

TDS on rent must be deducted at the earlier of the following events:

  • When rent is credited to the landlord’s account,

  • When rent is paid via cash, cheque, bank transfer, etc.,

  • Or at the end of the financial year,

  • Or when the tenant vacates the property.

Example 1:
If rent agreement runs from June 2024 to May 2025 and the tenant vacates in March 2025, TDS is to be deducted before making the last rent payment in March.

Example 2:
If tenant leaves in December 2024, then TDS must be deducted on the total rent paid until December before vacating.

Old vs. New TDS Rates on Rent

Time Period TDS Rate
Before October 1, 2024 5%
On or after October 1, 2024 2%

 

The revised lower TDS rate of 2% makes compliance less financially burdensome—but skipping it still invites harsh penalties.

Form 26QC and Form 16C: What Are They?

  • Form 26QC: A challan-cum-statement filed online for TDS on rent under Section 194-IB.

  • Form 16C: A TDS certificate issued by the tenant to the landlord after filing Form 26QC.

Both are mandatory—even if TDS is paid correctly.

Consequences of Non-Compliance

Missing TDS obligations has multi-layered consequences. Here’s a breakdown:

1. Interest Under Section 201(1A)

  • 1% per month: If TDS not deducted.

  • 1.5% per month: If deducted but not deposited.

2. Late Filing Fee Under Section 234E

  • ₹200 per day from the due date of filing Form 26QC till the actual filing.

  • Subject to a cap: not exceeding the TDS amount.

3. Penalty Under Section 271H

  • Discretionary: ₹10,000 to ₹1,00,000 for failure to file Form 26QC.

4. Prosecution Under Section 276B (Rare)

  • Applicable only in cases of willful default.

  • Punishable with 3 months to 7 years imprisonment and a fine.

  • Generally invoked if TDS default is over ₹25 lakh and delay is more than 60 days.

Sample Computation: What You May Owe

Let’s say you paid ₹55,000 rent/month from April 2022 to March 2024 and missed TDS completely.

Component FY 2022–23 FY 2023–24 Total
TDS Liability @5% ₹36,000 ₹36,000 ₹72,000
Interest @1% (24 & 12 months) ₹8,640 ₹4,320 ₹12,960
Late Fee @ ₹200/day (730 & 365 days) ₹1,46,000 ₹73,000 ₹2,19,000
Penalty u/s 271H (if levied) Up to ₹1,00,000 Up to ₹1,00,000 Up to ₹2,00,000

 

Total Liability: ₹3 lakh+ (even though your rent was paid on time)

If TDS Was Deducted But Not Deposited: Interest @1.5%

Suppose TDS was deducted but deposited 13–25 months late.

FY Rent Paid TDS @5% Delay (Months) Interest @1.5% Late Fee Penalty
2022–23 ₹7.2L ₹36,000 25 ₹13,500 ₹36,000 ₹10k–₹1L
2023–24 ₹7.2L ₹36,000 13 ₹7,020 ₹36,000 ₹10k–₹1L

 

Even if you were compliant halfway, late deposits attract serious penalties.

What If You Share Rent With Someone Else?

Let’s say the total rent is ₹60,000/month and shared by two tenants:

TDS Not Applicable If:

  • Each tenant pays ₹30,000 directly from their bank account.

  • Clear rental split is documented.

  • Either via two agreements or one agreement mentioning individual shares.

TDS Applicable If:

  • One tenant pays ₹60,000 in full and is later reimbursed.

  • Rental agreement is only in one name.

  • The tax department treats the entire rent as paid by one person.

In such cases, TDS must be deducted on the entire ₹60,000.

How to File Form 26QC (Step-by-Step)

  1. Visit: https://www.tin-nsdl.com

  2. Go to Services → e-TDS → e-Payment of Taxes → TDS on Rent of Property (Form 26QC).

  3. Fill in:

    • PAN of tenant and landlord

    • Rent amount

    • Period of tenancy

    • Property details

  4. Submit and make payment online.

  5. Save the acknowledgment.

  6. Wait 3–7 days, then download Form 16C from TRACES portal.

Avoiding Penalties: Expert Tips

1. Deduct TDS before paying the last month's rent.

2. File Form 26QC within 30 days of TDS deduction.

3. Issue Form 16C promptly to the landlord.

4. Use separate bank transfers if sharing rent.

5. Track notices from IT department (email/SMS/portal).

Conclusion: Stay Compliant, Stay Stress-Free

Abhishek’s case is a cautionary tale. Despite being punctual with rent payments, he faced a ₹1 lakh penalty due to ignorance of TDS rules. As rental thresholds continue to rise in urban India, more and more tenants cross the ₹50,000 mark—often unknowingly falling into this tax trap.

Understanding your obligations under Section 194-IB, filing Form 26QC on time, and issuing Form 16C can save you from financial distress and legal trouble. If you’re unsure, consult a tax expert or use platforms like LegalKart to avoid surprises from the Income Tax Department.

Law Students Challenge ₹50,000 CLAT Counselling Fee: Delhi & Kerala HCs Step In
Civil

Law Students Challenge ₹50,000 CLAT Counselling Fee: Delhi & Kerala HCs Step In

Introduction: The CLAT Counselling Fee Controversy

Every year, thousands of aspirants from across India prepare for the Common Law Admission Test (CLAT), the gateway to the prestigious National Law Universities (NLUs). But in 2024–25, a storm has erupted over the high cost of the counselling process—especially the ₹50,000 fee charged to secure admission after clearing CLAT. This steep fee, seen by many as unjust and exclusionary, has led to nationwide student protests, online petitions, and even court challenges.

Now, the Delhi High Court and Kerala High Court have stepped in, accepting petitions filed by CLAT 2025 aspirants challenging the legality and fairness of this fee structure. What started as a student-led movement has now grown into a national conversation about access to legal education, economic justice, and the constitutional right to equality.

What Is CLAT and Why the Fee Matters?

The Common Law Admission Test (CLAT) is a centralized entrance test for admissions to undergraduate (UG) and postgraduate (PG) law programs in 22 National Law Universities (NLUs) across India.

Here’s how the fee structure works:

  • Application Fee: ₹4,000 for general category candidates, ₹3,500 for SC/ST candidates.

  • Counselling Fee: ₹30,000 (General); ₹20,000 (Reserved Category).

  • Confirmation Fee: ₹20,000 (General); ₹20,000 (Reserved Category).

This means a student from the general category ends up paying a total of ₹54,000 (application + counselling + confirmation). For many students—especially from marginalised and economically weaker backgrounds—this is a huge burden even before admission is confirmed.

Student-Led Resistance: Who Raised the Voice?

The resistance against the counselling fee started at the grassroots level—by the students, for the students. A petition was circulated online, demanding that the Consortium of NLUs revise the fee structure and make it inclusive.

Prominent student bodies that backed this movement include:

  • Savitribai Intersectional Study Circle at NALSAR

  • NALSAR Student Bar Council

  • NLSIU’s Savitri Phule Ambedkar Caravan (SPAC)

  • DNLU Jabalpur Student Council

  • DSNLU Student Bar Association

  • NLIU Bhopal SPAC

Their collective voice forms a powerful message: Legal education should not be a privilege reserved for the wealthy.

What Are the Students Demanding?

The student petition highlights several concerns:

1. Financial Exclusion

Students from low-income families often don't have access to loans before admission is confirmed. The current system requires a large upfront payment, which is impractical for many.

2. Structural Barriers

Instead of simplifying the process, the two-tiered counselling and confirmation fee structure (₹30,000 + ₹20,000) introduced in 2023 has made it more complicated and expensive.

3. Lack of Refund Policy

If a student decides to withdraw from the counselling process, no refund is given. This is seen as exploitative, especially when some students are forced to opt out due to financial constraints.

4. Merger and Reduction of Fees

Students propose a single, reduced one-time payment, with a full refund policy for those who opt out before final allocation.

Legal Action Begins: Cases in Delhi and Kerala High Courts

The student movement took a legal turn when three CLAT 2025 aspirants, with support from the Legal Collective for Students’ Rights (LCSR), filed a petition in the Kerala High Court. A similar plea was also filed in the Delhi High Court by another candidate.

Kerala High Court Case

  • Date of Hearing: July 31, 2025

  • Petitioners: Three law aspirants supported by LCSR

  • Core Argument: The ₹50,000 fee is unconstitutional, creates economic discrimination, and violates Article 14 (Right to Equality) and Article 21 (Right to Education with Dignity).

Delhi High Court Case

  • Date of Hearing: September 9, 2025

  • Petitioner: Individual aspirant

  • Core Argument: The counselling process should have a clear refund mechanism and be aligned with the NEP’s goal of inclusive education.

Both High Courts have agreed to examine the matter, raising hopes among thousands of aspirants.

What Does the National Education Policy (NEP) Say?

The National Education Policy (NEP) 2020 stresses the importance of equity and inclusion in education, particularly for:

  • Economically weaker sections

  • SC/ST/OBC communities

  • First-generation learners

According to NEP:

“No student should be denied access to higher education due to financial constraints.”

Student groups argue that the current CLAT fee structure violates this principle, acting as a financial filter rather than an academic one.

Analysing the Consortium of NLUs’ Perspective

The Consortium of NLUs, responsible for conducting CLAT, has so far justified the ₹50,000 fee as follows:

  • Administrative costs: Running the centralised counselling portal, maintaining databases, and handling allotments.

  • Ensuring seriousness: A higher fee allegedly prevents casual applications or seat blocking.

  • Transparency: The fee system is pre-disclosed in official notifications.

However, critics argue that:

  • The same goals can be achieved with lower fees.

  • Technology costs have reduced, making administration cheaper.

  • Fee amounts should not be used as a deterrent against misuse.

Ground Reality: What Happens to Students Who Can’t Pay?

Let’s consider the case of Anjali (name changed), a CLAT aspirant from Bihar whose father is a daily wage worker. She scored well in CLAT 2025 but could not pay the ₹50,000 counselling fee in time. Despite qualifying, she lost the opportunity to get into a National Law University.

This is not an isolated case. Several similar stories are emerging from rural India, Dalit households, and first-gen learners.

The problem isn't lack of merit—it’s lack of means.

Public Outcry: Social Media, Petitions, and Solidarity

The online petition against the CLAT fee gathered thousands of signatures within days. On social media, hashtags like:

  • #CLATFeeWaiver

  • #MakeLawInclusive

  • #RefundCLATFee
    have trended across platforms like X (formerly Twitter), Instagram, and LinkedIn.

Lawyers, professors, alumni of NLUs, and even practicing judges have expressed concern over the exclusionary nature of the fee system.

Broader Implications: Is It Just About CLAT?

No. This issue raises broader questions:

  • Should professional education come at such high upfront costs?

  • Are public-funded universities accessible only to the middle and upper class?

  • Is the current system violating constitutional rights?

The CLAT fee debate could set a precedent for other entrance tests, including medical and engineering admissions, especially in publicly funded institutions.

What Can Be Done? Suggested Solutions

Merge Counselling and Confirmation Fees

A single consolidated fee of ₹20,000–₹25,000 would be more reasonable.

Introduce Installment Plans

Allow students to pay the amount in 2–3 parts, reducing the burden on families.

Make Fees Refundable

If a student opts out before the final round of seat allocation, they should get a refund (after deducting minimal administrative charges).

Set Up a Financial Assistance Cell

Just like IITs and IIMs have financial aid offices, NLUs should set up a pre-admission assistance mechanism.

Full Transparency

Counselling rules, refund policies, and seat allocation details should be made public and easy to understand.

What Legal Experts Are Saying

Renowned legal experts and educationists have weighed in on the matter:

  • Justice (Retd.) A.P. Shah: “Such high fees in a public entrance process create structural inequality and are legally questionable.”

  • Prof. Faizan Mustafa (Former VC, NALSAR): “If the CLAT Consortium is non-profit and public in nature, it must align its actions with social justice goals.”

  • Advocate Karuna Nundy: “Charging ₹50,000 from aspirants—many of whom are yet to get into college—without a refund policy is unjust enrichment.”

The Road Ahead: What Happens Next?

With hearings scheduled in two High Courts, the following outcomes are possible:

  1. Judicial Intervention: Courts may direct the Consortium to reduce or refund the counselling fee, or ask for a review of the process.

  2. Policy Reform: The Ministry of Education or UGC may step in, issuing guidelines for reasonable counselling fees in centralised entrance tests.

  3. Voluntary Reform by NLUs: Under public pressure, the Consortium may announce changes on its own to avoid negative publicity and court rulings.

  4. National Debate: This case could trigger larger legal and policy reforms across entrance tests in India.

Final Thoughts: A Fight for Access, Not Concession

This isn't just a fee protest. It’s a larger demand for justice in education.

The legal profession in India needs diversity—not just in terms of gender or caste—but also in economic representation. If financial hurdles prevent bright, hardworking students from entering law schools, we weaken the very foundation of justice.

The courts stepping in gives hope. But the real change will come only when institutions recognise that access is a right, not a luxury.

Conclusion

The challenge against the ₹50,000 CLAT counselling fee is more than a legal battle—it’s a movement to make legal education inclusive, affordable, and fair. With the judiciary now stepping in, the spotlight is on the Consortium of NLUsto align its fee structure with the values of equity and access enshrined in the Constitution and the NEP.

Whether you're a law aspirant, educator, or policymaker, this case is a reminder: the true test of justice starts not in courts—but at the doors of opportunity.